Japan machinery orders tumble, raise doubts on capex
Japan`s core machinery orders tumbled in June at the fastest pace in six months, with companies expecting a further modest drop in the third quarter in a discouraging sign that capital expenditure may slow.
The 8.8 percent fall in core machinery orders, a highly volatile data series regarded as an indicator of capital spending, was more than the median estimate for a 1.3 percent decline in a Reuters poll and marked the biggest drop since December 2017.
Manufacturers surveyed by the Cabinet Office have forecast that core orders will fall 0.3 percent in July-September after a 2.2 percent increase in April-June.
The machinery orders, which come a day before data expected to show the economy resumed expansion in the second quarter due to robust consumer spending and capital expenditure, may increase policymakers` concern about future growth.
By sector, orders from manufacturers slumped by 15.9 percent in June, after a 1.3 percent increase in May, while service-sector orders decreased 7.0 percent, versus a 0.2 percent increase the previous month.
The Cabinet Office lowered its assessment of machinery orders, saying a recovery in orders has paused.
Gross domestic product (GDP) is expected to have expanded at an annualised rate of 1.4 percent in the second quarter, the Reuters poll of 16 analysts showed.
That would translate to a 0.3 percent expansion in April-June from the previous quarter.
In January-March, the economy shrank at an annualised rate of 0.6 percent, marking the end to eight straight quarters of growth.
Risks to the outlook remain as U.S. President Donald Trump`s protectionist trade policies and his threats to impose tariffs on imported autos and auto parts cloud the prospect for Japan`s export-reliant economy.
Japanese companies could cut back on capital expenditure if they think exports will slow due to trade friction with the United States, some economists have said.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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